Dairy Crest has blamed rival processors for a decision to cut its milk price to farmers supplying its commodity cheese factories by 0.5ppl.
The company said a failure by its competitors to match a price rise it pushed through last year had left it with an uncompetitive differential of 1.5ppl. Rising costs were also a factor in the decision.
Arthur Reeves, Dairy Crest milk purchasing director, said: “Last summer we increased the price paid for milk for cheese by 0.8ppl. We said then that we expected our
competitors to follow our lead, but this hasn’t materialised.”
Dairy Crest is using industry milk price league tables to compare its prices with its competitors - principally Milk Link, which owns The Cheese Company, and First Milk, which supplies Lactalis. Reeves added: “We are starting a new round of tenders with all our customers and are finding that we are paying a lot more for our commodity cheese milk.”
Neither Lactalis nor Milk Link was prepared to comment. Tom Hind, NFU chief dairy policy adviser, said that Dairy Crest was under pressure from Asda, with whom the processor has an exclusive supply contract for own label cheese, to help it bring prices down.
Reeves denied that Asda was squeezing Dairy Crest excessively. “We are not being put under enormous pressure. Asda is being pretty fair, and is behaving responsibly.”
The cut will apply from March 1 and will affect direct suppliers to Dairy Crest’s Haverfordwest and Aspatria creameries. Prices remain unchanged for suppliers to Davidstow, where Cathedral City Cheddar is made, reflecting better returns in the branded mature Cheddar market.
Chris Walkland